The Pony engine needed the oil change . Water seem to be getting into the oil and clutch oil as well.the oil on the pony motor was mixed with water and clumpy. I was surpsrised that it ran.
According the operation manual it state that it takes 4 1/2 qrt of oil. and the clutch takes 1 1/2
at first I put the full 4 1/2 and none into the clutch area as it suppose to flow into the clutch housing. it turned out to be to much oil, and none of the oil went into the clutch, which had to be filled thru breather. when I started the engine and the excess oil came out of the input. so we drained it and fill enough to the oil mark. which is only 21/2qrt . What the correct process to changing oil on the Pony engine ?

The front drain plug drains the motor and the clutch housing. You just put oil in the engine. Oil flows to the clutch housing through a passage.
The transmission has it's own drain plug and is independent of the motor and clutch. Attached fill quantities.

I must have made a mistake in reading the manual
Your attachment show that starting engine takes only 2 1/2 qrt. I put 4 1/2 , that is why that little guy was choking.
This machine has a serial D717A 14946 , does it have the flow into the big engine thru the rear engine support

By serial # 17A5092 the pony motor lube system was made independent of the main engine so your serial # should not have the return line through the rear support bracket.